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Tag Archives: Epic Games

The big news in early December was that Epic Games was going to create their own online digital games storefront to compete with Steam.

Steam is big. Big enough that no competitor is going to show up and hit them with a single knock-out blow. EA couldn’t do it. GoG certainly couldn’t manage it. Amazon might have a shot via Twitch some day. There is Discord gamely trying. The Microsoft store persists out there, if you want the non-Java Minecraft of the remastered version of Age of Empires. And recently Apple has been talking about a Netflix-like “games as a service” service.

And, despite its dominance, Steam is not unassailable. Steam is vulnerable on a few fronts where an upstart could steal part of their pie. There are viable markets to be invaded in the Steam portfolio.

Because who wants to be Steam anyway? Is somebody else itching to be the top purveyor of Hentai themed Minesweeper knock-offs? Let Valve remain king of their garbage heap.

Still, Steam was clearly their target.

Back when the Epic Store was announced, their big play was aimed at the development side of the equation, where Epic was planning to take only 12% of the sales price… and waive the fee for their Unreal engine… compared to Steam’s 30% cut.

Look how much more Steam takes

This prompted some questions.

This silliest was asking if Steam “deserves” a 30% cut.

As Clint Eastwood said in Unforgiven, “Deserve’s got nothing to do with it.” What made this especially silly was that this came from the developers, who honestly ought to know better. That is the same group that howled over every possible barrier to entry that Valve set up for Steam, because being on Steam was their only chance at success. Well, 30% was the cut when they were on the outside desperate to get in, but now that they’re in that cut is too much. It is as if people just complain about everything… which they do. (I also feel like pointing out the cut that studios got back in the brick and mortar retail days.)

Still on the silly side of things were people wondering if prices might be lower on the Epic Store given the smaller cut Epic planned to take.

As if. I bet the devs complaining about Steam’s cut would argue vehemently against this.

There is a stubborn ignorance out there that still assumes that cost and pricing are somehow linked. The two are not, save for cost represents the floor above which most companies would like their pricing to remain. But a year back we had a long discussion about how much it costs to make video games, at least top tier AAA games. So one might argue that video games is an industry where that floor isn’t even part of the equation.

Pricing is based on what the market will bear and what your competitors are charging. We pretty much know the price of any big name game coming from EA or Activision before they announce it. It is going to be $59.99. Do all those games cost exactly the same to make? Or is there just an industry price beyond which studios believe they cannot stray lest it have an impact on sales? I think you know the answer.

More on point were end users in touch with reality asking why they should care about the studio’s cut if prices remained the same. If you’re already invested in Steam and have a big library there, what would Epic’s store offer besides the inconvenience of another login to manage?

Well, we got the answer to that. Exclusives!

It is the console wars all over, writ small. How do you get somebody on to your platform? Offer something that the competitor doesn’t have. Epic already had Fortnite, so that was a given. But they needed something else. They needed titles that Steam wouldn’t have.

When they managed to snag The Division 2back in early January, that was news. That gave Epic a big title that Steam would be denied, though UbiSoft would still be selling it directly as well.

Note from Steam – When You’re Number One You Never Name the Competition

While Deep Silver said they would honor pre-orders, this got people to howl, and all the more so because the price on the Epic Store was $10 less. (You might be tempted to claim this as evidence that there will be a benefit to consumers on the pricing front, but I’d as soon bet that Epic offered additional incentives to get Deep Silver on board and at a lower price.)

That is how you get the market to take you seriously. So seriously though that people were talking boycotts and such and Deep Silver eventually had to clarify that Metro Exodus would be available on other platforms come February of 2020. At least you know it will be cheaper by then I guess.

This sort of thing isn’t going to turn the Epic Store into a full fledged Steam competitor. But I don’t think they want that. This will make Steam take them seriously though, as it takes money straight out of Valve’s pocket. Metro Exodus was going to be worth more to Valve than a few thousand more indie titles cluttering its store front. And given the persistent rumor that the only reason Epic has a storefront is because their parent company, Tencent, is to hit back at Valve for going into the China market with Perfect World Entertainment rather than them, and it seems to make a bit more sense.

Anyway, I don’t think Steam is going anywhere. Valve is too entrenched to be moved quickly. Epic will be another minor player, taking a bit of the riches from Steam. There is a temptation to compare this to what is happening with video streaming services these days, where Netflix has lost its grip as every major player has decided to open up their own service. I suspect that will shake itself out on its own when people vote with their wallets and a bunch of those services find they were doing better just licensing to Netflix or Hulu. But on the video game front it is different, as there is no subscription to pay… at least until Apple shows up… just some logins and front ends to manage.

Some players are always going to be big enough to roll their own. EA’s Origin, for example, is less the Nordstom storefront they promised and just them having their own online store so they don’t have to share with a competitor. You don’t even need it for all of their games.

Likewise Blizzard has their launcher-and-store combo, which Activision, lacking their own, has decided to use as well.

Others, like UbiSoft or Paradox, play both sides of the game, listing on other storefronts while maintaining their own as well.

I suppose the real questions are how Steam got to be so popular in the first place and why it hasn’t really felt much in the way of heat from challengers up until now?

In hindsight it seems like some sort of crazy accident. A little over 15 years ago, in September 2003, Valve launched a replacement for World Opponent Network, the Sierra Online created platform and which Valve ended up owning, because they wanted something that would do software updates, DRM, anti-cheat, and online matchmaking in one package.

And thus Steam was born. First it was for Counter-Strike, but the real test came with the launch of Half-Life 2, the first game that made it mandatory to register with Steam. Problems with that, including inadvertent suspending of a lot of people whose only mistake was buying the retail box (myself included) did not seem like an auspicious moment for the fledgling platform.

That’s me being beaten by the metro cop

Me being me, that soured me on Steam and all things Valve for a good five years. I burned my account and walked away. The arbitrary nature of my experience and the whole “I have the physical disk why can’t I just play the damn game?” question kept me away. But it was an era where the physical disk was still king, so one could do that. I walked by the Orange Box on the shelf at Fry’s with my nose in the air, knowing it was another Steam scam. I wasn’t going to play Portal because I felt Steam was the lie.

But things changed over time.

The coming of Civilization V was the turning point for me.

Up until then I had purchased every new version in the Civilization series at the first possible opportunity. The fact that the game required you to register it and use it with Steam gave me pause for a couple of days, but eventually I caved. I created a new Steam account, which is the one I still use today, so I could get in on that traditional day one Civ fun.

Same as it ever was

I remained wary of the service. Again, the idea that one company could basically remove my ability to play video games I had purchased… not MMORPGs, but single player games… kept me from getting comfortable with Steam for a long stretch.

But then we entered the era of the Steam sale. I think that, more than anything, made people get on board with Steam.

The concept, as initially explained, was quite simple. Any game that launches… and we’re talking about games from big studios with marketing budgets, not indies… will have a certain amount of demand for it at the list price. Once that market has been exhausted one can stimulate further sales by lowering the price. That gets people who weren’t going to give you any money to buy in. You get less money, but it is better than no money.

This was the price/demand curve from Economics 1A of my freshman year of college. This was supposed to make developers more money.

What it really did was train a lot of people to wait for the inevitable Steam sale, or at least that is one of the complaints you hear from devs now and again. Steam ruined the concept of list price.

Along the way Steam went from being a service for Valve games to being the DRM and matchmaking for certain third party games, to being the sales platform for just about anybody. At the same time Valve went from being the company that make good games (that inevitably arrived late) to the company that runs Steam. Being an online retailer turns out to be a pretty profitable business compared to video game development.

The problems of success are the best problems to have, but they are still problems. Over time Valve removed just about every barrier to entry that kept any dev from getting on to Steam. And every dev wanted to be on Steam because, during a short period of time, being on Steam was the key to success. That was the visibility you craved as an indie dev. But the mad rush towards success and Valve simply letting everybody in got us to the pile of garbage that is most of the games on the service today. Getting on Steam is no guarantee to sales or even visibility anymore.

Meanwhile, competitors lurked.

Sure, a lot of people were happy to sell through Steam. Buying a discounted Steam code for a title at Amazon or Green Man Games is a pretty normal thing.

Others were unwilling to cut Steam in on their action. You don’t find any Blizzard games on Steam. They don’t need to sell there, they are big enough on their own.

For some reason Activision was okay putting Call of Duty on Steam for ages. I suspect that, in a world where a lot of CoD sales are on consoles where the retail channel and the platform owner take their cut off the top, Steam taking their due didn’t seem like a bad deal. But with the coming of digital distribution that seems to have changed finally.

There were small players who tried to get into the Steam-like sales platform business. I remember the late Trion Worlds trying to turn their Glyph launcher into a third party storefront.

Then there was EA, who wanted to take on Steam by being, in their words, the Nordstrom to Steam’s Target. That didn’t work out for them as well as they had hoped. EA’s reputation, hardly akin to anything like Nordstrom, kept them from being a overall competitor to Steam. But with their Origin storefront they were able to opt out of Steam with SimCity and The Sims 4, depriving Steam of some revenue.

Which brings us to the situation as it stands now. Steam is a mess. New titles get lost in the morass of new titles that spring up every day. Steam wavers on how to deal with its problems on that front. Meanwhile, Steam’s cut of sales, once tolerable in the age of physical media, is now starting to be a drag on margins, a concern to any dev who is publicly held. So things are running against it.

Big devs like Activision are more than happy to sell Call of Duty to you directly (or via the Blizzard launcher). Fallout 76 also chose to give Steam a miss, a first for the franchise in a long time. And it seems like that plan is going to become more common. To counter that Valve has announced a new revenue sharing plan, so if you make more money Steam will take less of a cut.

And then there was Epic Games’ announcement earlier this week that they plan to offer their own platform and only take 12% off the top compared to Steam’s default 30%, even waving the fees for using their Unreal Engine if you go with them. They even have a nice revenue split chart with their announcement.

Look how much more Steam takes

And if that were not enough, both Discord and Twitch have been backing their way into becoming game selling platforms. Amazon, which owns Twitch, has been priming the pump with free games available via the Twitch client (the one time Curse client that a lot of us had already installed to manage WoW addons) for Prime members. And you can just bet that will be the platform used to sell their upcoming games. And Discord has had its own storefront going since August.

What is Steam going to do?

Well, they do have all the advantages of the incumbent, including a lot of players with large investments in their Steam libraries. I’ve said in the past that this is a huge barrier to any competing service showing up. I certainly do not want to have to keep track of which game I have on which service. I have problems enough remembering which show or movie I want to watch is on Netflix, Hulu, Amazon, or Comcast.

And then there is all of the community stuff like mods that Steam has accumulated over the years. You can’t make that sort of thing happen overnight.

So how do you assail an incumbent? Be better, be cheaper, or be different.

There are certainly ways to be better than Steam. I do wonder what Epic’s plan on that front is. By lowering their take so dramatically compared to Steam they are going to see a lot of interest from smaller devs who will feel like they are getting the shaft from Steam and the announcement that big players pay less. Epic just has to figure out how to curate so they get quality rather than quantity.

Being different is hard to assess, so I’d have to see more from any Steam competitor. I don’t like the Steam storefront interface, but I dislike it less than most competitors.

And then there is being cheaper, which Epic went for in a big way. Not cheaper for you and I, but cheaper for the developers using their platform. At the percentage they are talking, and with the muscle they have developed pushing Fortnite, they might be able to woo some bigger titles their way.

We shall see. The path of Steam over the years has been a strange one from time to time. I doubt it will be over any time soon, but Valve’s dominance does seem to be under an actual threat for the first time.